Why to invest in India
The economy of India has seen a prototype shift since the last ten years and is on a healthy growth trail. Today, the Indian economy possess a steady and constant Annual Growth Rate, Flourishing Capital Markets, and all time rising Foreign Exchange Reserves.
The equity market in India, with approximately US$ 600 billion worth of market capitalization, has materialized to be the third-largest equity market, behind China and Hong Kong, in the Asian region, according to the Asian Development Bank’s (ADB) report titled “Asia Capital Markets Monitor”.
The year 2009-10 saw the Indian economy post a growth of 8.0 per cent up against the growth rate of 6.8 per cent during the previous year. The massive growth of the GDP during 2009-10 is the result of increased growth in transport, storage and communication (15.0%), community, social and personal services (11.8%), financing, insurance, real estate & business services (9.2%), and manufacturing (8.8%).
8 Reasons to Invest in India
Here are the top eight reasons why India is one of the best treasure zones for investors:
1. Size of India
India is the 8th largest economy in the world with its GDP currently at US$1.3 trillion,. However, in PPP terms, India will become the third largest economy in the world (after the USA and China) , it identifies India’s low cost base, the GDP speculatively rises to three times the current amount (US$3.8 trillion) which places India on a similar size to Japan by 2013. However, despite representing 7.5% of Global GDP (on a PPP basis) in 2010, India attracts less than 0.5% of investment inflows. Something which is unlikely to continue for long now!
2. Economic growth
The fact that India’s economy is currently growing by 8.75% per annum (in 2010) and this GDP growth rate is estimated to expand to 9% – 10% per annum for every single year for the next 10 years. India’s GDP will develop another five times in the next 20 years, and the GDP per capita will almost quadruple.
Consumer goods and Pharmaceuticals to infrastructure, Energy and Agriculture are some of the starters in the Indian economy to offer opportunities to the investors. India has proved that the Industrialization and the export of commodities are not the only the path to rapid economic development but with its strong services sector (comprising 50% of India’s economy), particularly in knowledge-based services (IT, software and business services).
It is one of the youngest countries in the world, with an average age of 25 and likely to get younger. India’s working-age population will grow to a astonishing 240 million over the next 20 years and with a population of 1.2 billion, a strong work ethic, high levels of education, democracy, English language skills and an entrepreneurial culture, India is speculated to dominate the global economy in the next 20 years.
5. High Savings
With a savings rate of 37% of GDP, and only 20% of India’s total public debt is sourced from foreign borrowing , India’s domestic savings nurture most of its investment requirements,. With significant investments to be made in developing India’s poor infrastructure in the next 10 years (estimated to be US$1.7 trillion) the government of India is taking a variety of actions to further promote private and foreign investments.
6. Domestic economy
India’s domestic consumption, mostly led by the private sector, plays a major role in India’s growth and is expected to remain grounded as more people enter the workforce and also with the emerging middle classes. India’s wealthiest consumers (those earning US$1m or more in PPP terms) will reach a massive 40 million in the next 10 years! Every sector within India’s consumer market is prospering , making India far less vulnerable to external shocks and pressures than other emerging markets.
7. A robust financial sector
India has a fresh, healthy, assorted and well synchronized financial system which has allowed it to face the global financial catastrophe without any major trouble and also has presented an image of quality, flexibility and transparency. India’s banking sector is also strong, with top quality balance sheets, high levels of competition (there are around 80 banks operating in India) and a strong corporate governance.
8. Quality of Investment Markets
Being the second oldest in the world The Bombay Stock Exchange(165 years) it offers investors a low cost, highly efficient, modern and well governed environment in which to prosper from India’s extraordinary economic development. The Indian stock market has produced investment returns of over 15% per annum for the last 10 years and experts expect this rate to grow in the next decade. More extensively importantly perhaps, Indian investors have doubled their money over the last three years at a time when many have lost money in almost every other market.
Main advantages of India
* World’s largest democracy
* Stable political environment and responsive administrative set up
* Land of abundant natural resources and diverse climatic conditions
* Second most attractive FDI location in the world
* Healthy macro-economic fundamentals
* Cost competitiveness; low labour costs
* Large pool of skilled manpower resources.
* Strong knowledge base with significant English speaking population
* Young country with a median age of 30 years by 2025
* Huge untapped market potential
* Investor friendly policies and incentive based schemes
* Progressive simplification and rationalization of direct and indirect tax structures
* Reduction in import tariffs
* Full current account convertibility
* Compliance with WTO norms
* Well established judiciary
* Robust banks and financial institution